Section 9(i)(ii) provides that any income which falls under the head “salaries” if it is earned in India would be deemed to accrue or arise in India.

The expression ‘income earned in India’ to mean payment for the services in India even if the contract is executed outside India or amount is payable outside India. Therefore, the payment of salary for off-period was income earned in India i.e. for services rendered in India under section 9(i)(ii). Hence, the entire salary for both the periods taxable in India under section 9(i)(ii).

Salaries and Perquisites Payable by the Government to Citizen of India Salaries payable to citizen of India for service rendered to Government at any place outside India are, by section 9(i)(iii), deemed to have accrued or
arisen in India irrespective of the place of services or the place of salary payment. However, by virtue of section 10(7), any allowance or perquisite paid or allowed outside India by the Government to a citizen of India for rendering services outside India, is fully exempt from tax.